A downtown tax incentive board recommended a total of almost $1.7 million Thursday for a Waco development team to use on two mixed-use projects.

The Tax Increment Finance Zone No. 1 board approved $925,650 to help with the redevelopment of an entire block at Mary Avenue and University Parks Drive, which would include restaurant and retail uses, including a new home for Bicycle World.

Developers Shane and Cody Turner are teaming with Bicycle World owner Todd Behringer on the property, which they bought for $3.3 million. They plan to invest some $4.5 million in private funds, according to their TIF application. The TIF money would mostly go to sidewalks, facade improvements, landscaping, decks and electric line burial.

The same team won a recommendation for $761,667 in TIF funds for similar work on Franklin Square in the 700 block of Franklin Avenue. The partnership has already gutted three buildings on the site, including the old Labor Temple, and is planning a combination of lofts, retail and restaurants with a construction cost of almost $4 million.

TIF funds have been largely depleted with the recent award of $20.2 million for the Brazos Promenade project, so the payments will be spread over three years.

The votes for both projects were unanimous, but they didn’t come easy. The TIF board spent almost two hours talking about the projects and the right method to use in calculating TIF contributions.

The board oversees a reinvestment zone that uses growth in downtown property tax base to help pay for redeveloping the same area. The Waco City Council makes the final decision on the funds.

In the past few years, the TIF board has shifted from giving a standard 15 percent to help with approved developments, instead calculating the award using a complex formula.

Projects get points for boosting tax base growth, preserving historic buildings and adding to the vibrancy of downtown, among other factors.

But the two projects before the TIF board fared badly under that scoring system. Franklin Square would have received only 6 percent of project cost, or $236,640. The Mary Street project would have received no funding at all.

City and City Center Waco staff agreed with board members that the projects deserve significant TIF investments. They said both projects would bring visitors downtown and would greatly improve downtown’s pedestrian infrastructure.

“I don’t think the numbers reflect the intent of when the rules were adopted,” City Center Waco executive director Megan Henderson said.

‘Broken’ system

Henderson said the scoring system is “broken,” partly because it treats TIF funding more as an incentive for businesses instead of an investment in public improvements.

“I think this gets us to a conversation about how are we funding sidewalk connectivity as a goal in and of itself, beyond the needs of an individual project,” she said.

Assistant City Manager Cynthia Garcia said landscaped sidewalks and buried utility lines add to the overall attractiveness of downtown, but without TIF funds, developers may choose not to pay for them.

“The things we’re asking developers to do make sense, but it costs more dollars that may not be supported by the project,” Garcia said.

TIF board member Malcolm Duncan Jr., the former Waco mayor, agreed that the scoring model should be set aside, but he didn’t know what to replace it with.

“We thought we were halfway to objectivity,” Duncan said. “But I don’t have any confidence in this scoring model. The model was there, the priorities were defined, but now it’s working against us.”

City staff has proposed a new way of calculating TIF contributions based on a “gap analysis” of how much help a project needs to be financially successful, but the board has been reluctant to adopt the model because of the difficulty of proving business projections.

TIF board members and staffers agreed to work on a new system that would better reflect the city’s stated priorities for downtown.

The board Thursday relied on the staff’s recommendation for funding amounts for the two projects, taking into account the high cost of sidewalks and landscaping along several entire block faces.

Shane Turner asked the board for $995,376 for Franklin Square and $1.5 million for the Mary Avenue project.

He said the lofts at Franklin Square would be preserved according to state standards and would feature original wood floors and exposed brick.

He said he has a waiting list for his other downtown Waco lofts, and he expects strong demand for retail, too.

“We’re already getting a ton of inquiries on lease space,” Shane Turner said. “It’s going to be a great project.”

After the meeting, the Turner brothers said they are satisfied with the incentive and are shooting to have both projects done in 2018.

Cody Turner said the TIF board has a difficult task in figuring out how to incentivize development and upgrade public spaces in different parts of the TIF Zone.

“I think they’re on the right track using it for infrastructure and public use, so it’s not project-specific,” he said.

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